Microinverters and power optimizers – perspectives of distributed PV system architecture in the residential market

by Christian RoselundApril 4th, 2011

Among the exciting developments in today's PV industry is the growth of microinverters and power harvesting systems, and their potential to act as disruptive technologies. However, there are a number of questions that remain regarding these technologies, including: What are their concrete benefits? Are they worth the extra cost? And eventually, which market share will microinverters and power optimizers gain?

Enphase M190 Microinverter. Courtesy of Enphase Energy Inc.

These are some of the questions that we will address in this report by Solar Server, which was made possible with the assistance of Lux Research Inc. (Boston, Massachusetts, U.S.), and IMS Research (Wellingborough, U.K.). In particular Solar Server would like to thank Research Associate Matt Feinstein of Lux Research and IMS Research Photovoltaic Group Director Ash Sharma for providing data and analysis.

Note: in this report the terms "power optimizers" and "power harvesting devices" are used interchangeably.

What they do: inverters, microinverters and power optimizers

Microinverters are a new way to address the fundamental problem of converting the direct current (DC) produced by solar photovoltaic (PV) modules to the alternating current (AC) which is used in electricity distribution grids, and which most appliances require to operate.

Currently, this problem is usually addressed by one of two dominant technologies: central inverters and string inverters, which together make up roughly 99% of the market for power conversion for solar photovoltaic (PV) systems.

Central inverters are used in systems where the entire DC output of a PV array is brought to one point, and then converted to AC by one or more inverters. They offer significant economies of scale both in production and installation. Due to their low per watt costs and the simplicity of design, central inverters are the power conversion device of choice for large PV power plants.

String inverters are used in systems where PV arrays are divided into individual groupings ("strings"), with power conversion occurring at each string. These offer similar economies of scale, and are more flexible than central inverters.

Microinverters by contrast convert the DC electricity generated by PV modules to AC at each individual module. The technology has been pioneered by market leader Enphase Energy Inc. (Petaluma, California, U.S.), and in recent years a number of microinverter start-ups have emerged, some with novel approaches to incorporating the technology.

MPPT and monitoring

In addition to converting DC power to AC power, most inverters perform another function, which is to pull the optimum combination of current and voltage from the modules in a PV system in order to maximize output by watt.

The current and voltage produced by PV modules, and thus the point that delivers the optimal combination of the two, changes over time. Electrical engineers have developed a method of tracking that point, called maximum power point tracking (MPPT). MPPT has become standard for inverters.

However, a challenge for central and string inverters is that this point can be different for different modules in a PV system, which traditional inverters lack the flexibility to address. Microinverters, by contrast, offer MPPT at the module level.

Another function that is often built into inverters is the ability to monitor module output, which is important for detecting system faults. A primary advantage of microinverters is that they can report this information at the module level, which can lead to more timely diagnosis of problems.

Power harvesting systems; parallel installation

Power optimizers offer many of the advantages of microinverters, including MPPT and monitoring at the module level, without DC-AC conversion.

Tigo Energy power maximizing system. Courtesy of Tigo Energy Inc.

Additionally, some power harvesting systems offer for parallel DC architecture, which allows PV modules to be wired in parallel instead of series. Similar to microinverters, this helps to reduce problems due to shading, module mismatch, and other issues.

Most power optimizers function by means of electronic devices attached to the modules or circuits built into junction boxes. These devices are used in addition to string or central inverters, and some power optimizer companies, including SolarEdge Technologies Ltd. (Hod Hasharon, Israel) sell their own line of inverters.

Advantages of microinverters and power optimizers

Microinverters and power optimizers claim a number of advantages: less power loss due to shading, module mismatch and other problems, greater flexibility in system design, enhanced safety for installers due to the absence of high voltage DC wires, and the ability to extract more electricity from the individual PV module.

As with any new technology, it is important to establish both the accuracy and the relevance of claims being made.

Shading, dirt and dust

Aside from those systems located in open fields, deserts, or on the tallest building around, many PV systems face challenges due to shading. With both centralized and string inverter architecture, the shading on one module will affect the entire string, meaning that if one module has a 20% reduction in power due to shading, the output of the entire string will be reduced by 20%.

Average percent reduction in PV system output due to shading from a sample of 119 systems conducted by Kema Inc. for the California Energy Commission. Courtesy California Energy Commission and Kema Inc.

A report by consultants to the California Energy Commission states that in a sample of 119 PV systems, 85% experienced some shading, with 30% having more than a 5% reduction in output due to shading, for an average of 7% reduction in output over the sample.

This makes shading among the most serious threats to power output in residential and small commercial installations, and the ability of microinverters and power optimizers to reduce the harmful effects of shading by isolating shaded modules is among the strongest and best-verified selling points of these technologies.

Dirt and dust are similar problems in that they prevent light from interacting with the module. According to the same study, typical losses from dust are around 7%, with very dirty modules losing as much as 25% of output. However, microinverters and power harvesting devices are not as well suited to mitigate this problem, as dirt and dust buildup tend to affect an entire array - not a single module.

Flexible system architecture and greater power harvest

A related advantage of microinverters is that they can accommodate greater flexibility in system design, including placing some modules in partial shade without affecting the output of the entire system.

By modifying output at the module level, both power optimizers and microinverters can also overcome the problems of potential string and module mismatch.

By performing MPPT at the module level, makers of both microinverters and power optimizers claim that their products can draw power more effectively from PV modules. Manufacturers cite power gains up to 25%, in part due to the aforementioned potential mitigation of the effects of shading and module mismatch. However, industry analysts have challenged the numbers cited by some of these companies.

Longer lifetimes, reliability

Inverters are the part of PV systems most prone to early failure. Microinverter companies and some power harvesting companies have focused on developing longer product lifetimes, offering 15-25 year warranties.

A major issue in microinverter design has been the choice of whether to use electrolytic or thin-film capacitors. Microinverter industry leader Enphase uses electrolytic capacitors, however most other microinverter start-ups including SolarBridge and Sparq Systems Inc. have eliminated electrolytic capacitors in their designs, which they say allows for longer product lifetimes.

Both SolarBridge and Sparq offer 25-year warranties with their products, and Enphase offers a 15-year warranty.

Barriers to adoption of power harvesting devices and microinverters

Cost

The choice to replicate power conversion at the level of each individual module does note com cheaply. Lux Research estimates that the cost of microinverters averages between USD 0.50/watt and USD 1.00/watt, compared to central inverters, which are typically below USD 0.30/watt, or string inverters, which range between USD 0.25/watt and USD 0.50/watt.

The cost of power optimizers ranges widely, anywhere from USD 1/watt to USD .10/watt.

Industry analysts note that the higher cost of such devices makes marketing difficult in an industry with a relentless drive to bring down costs to compete with conventional energy sources.

These higher costs are also a barrier to the growth of these technologies in the residential market, particularly as they often require a larger initial investment in the same sized PV system. Residential PV system owners often struggle to pay these up-front costs, and many choose to go with a less expensive option even if it does not offer the benefits that a microinverter or power harvesting system does.

Power optimizers, while offering greater power harvest, add an additional efficiency loss to systems. However, it should be noted that the makers of microinverters and power optimizers state that the additional power harvested using their devices far outweighs single-digit efficiency losses at the conversion level.

Lack of familiarity

Finally, the adoption of these products requires market education of their benefits, and in many cases system owners, developers and installers choose to stay with less expensive options that they are familiar with. Some microinverter and power optimzer companies have chosen to partner with established module and inverter makers, which can assist with this issue of familiarity.

Costs and benefits weighed; Power harvesting examined

Both Lux Research and IMS Research state that the strongest selling point of microinverters is their ability to limit losses due to shading, which is more often an issue with residential and small commercial installations.

As for the claims of greater power harvest, Industry Analyst Matt Feinstein of Lux Research states that for most PV plants, additional power harvests are much lower than the makers of microinverters and power optimizers claim.

"What they boast is that, due to the different distribution architecture they are going to get 15%-25% additional energy harvest," states Feinstein. "But the truth is, that's a claim, that's all that is, often times it's not guaranteed, it's not verified, and frankly many installers don't believe it."

"And in certain situations that really call for it you might see that really good boost of harvest, something like 15%, but a lot of times installers are saying, we are seeing less than 5%. Which doesn't necessarily justify the cost, even for power optimizers, which will be in the ten cent or teen cent range per watt."

Warranties and reliability

Long warranties are a primary way that microinverter makers have emphasized the durability of their products. A consideration noted by Lux Research is that as microinverters and power optimizers are relatively new technologies, data is not available as to whether or not these devices will actually last as long as their warranties.

Warranties are an assessment of financial risk, not mechanical risk, and Lux Research also notes that warranties in any industry carry a number of caveats that can be used to limit claim payment.

Microinverter makers have also noted that there are significant differences in warranties between products.

Market segments - system size and geography

Such cost/benefit considerations are different for different systems and particularly different system sizes. "There is a break even point, at what system size do microinverters provide benefits or don't provide benefits, and installers are pretty confident that they know where that is," states Feinstein of Lux Research.

The greater advantages of microinverters for smaller installations is reflected both in marketing and existing market share, which emphasizes residential and small commercial market segments. In 2010 microinverter maker Enphase captured 13% of installations smaller than 10 kW installed through the California Solar initiative, and 9.3% of commercial systems sized 10-100 kW.

Likewise, SolarBridge CEO Ron Van Dell states that his company's target market is PV installations up to 100 kW or 200 kW in size.

The market share for power harvesting devices tends to include a larger range of system sizes, however IMS Research notes that power optimizers are most successful in residential and large commercial rooftop installations. IMS Research does not predict high penetration into systems larger than 1 MW.

Geography

Until recently, microinverters were mostly confined to the United States. Almost three years after rolling out its microinverter product line, Enphase opened its first European offices on March 3rd, 2011. SolarBridge also states that it expects to first build a presence in the U.S. market before expanding to Europe.

Market analysts cite the same barriers to acceptance of these technologies in Europe as in the United States - including inertia from installers and developers as well as the higher price tag. However bad past experiences that Europeans have had with AC module architecture may also play a factor in the delay.

Power optimization companies have a broader geographical range, and both SolarEdge and Tigo Energy Inc. (Los Gatos, California, U.S.) have offices in North America, Europe, Asia and the Middle East. IMS Research estimates that 45% of the current power optimizer market is in Europe, and 45% in North America.

Leading power optimization companies and products

The following list of companies is not comprehensive, but is meant to give an overview of some of the industry leaders in these technologies. It is important to note that detailed financial information is not available for many of these companies, as even the industry leaders have not yet held initial public offerings.

SolarEdge PowerBoxes. Courtesy of SolarEdge Technologies Inc.

SolarEdge

SolarEdge is a relatively established player in the power optimization world, having introduced its first products in May 2009. The company's main products include its PowerBox optimizer, both single and three-phase inverters, and its SolarEdge PV monitoring portal.

SolarEdge has more than 100 employees, with offices in the United States, Japan, Germany and Israel. Flextronics International Ltd. (Singapore) manufactures SolarEdge products, employing an additional 180 workers.

SolarEdge's funders include GE Energy Financial Services, ORR Partners and Genesis Partners. In October 2010 the company announced a USD 25 million financing round.

Tigo Energy

Tigo Energy is another relatively established power optimization company, and was founded in 2007. The company's Tigo Energy Maximizer performs module level power management, using patented impedance matching technology, and Tigo Energy markets its products for a wide range of system types, from residential to utility-scale.

In June 2010 Tigo Energy announced in that it had raised a total of USD 27 million in funding, and in October 2010 Tigo Energy stated that it had partnered with Suntech Power Holdings Company Ltd. (Wuxi, China), the world's largest PV manufacturer, to integrate Tigo Energy's solution to create "smart" module technology, as well as partnering with inverter maker Kaco New Energy Inc. (San Francisco, California, U.S.).

National Semiconductor's "Solar Magic"

Semiconductor giant National Semiconductor Corporation (Santa Clara, California, U.S.) offers several different types of power harvesting and monitoring devices through its "SolarMagic" line. These include MPPT controllers, gate drivers, voltage regulators, and sensors, available as chip sets for integration into existing devices.

eIQ vBoost 250. Courtesy of eIQ Inc.

eIQ

eIQ Energy Inc. (San Jose, California, U.S.) offers parallel PV system design with the use of its vBoost product. This enables the avoidance of "series" losses from shading, module mismatch and other factors similar to microinverters, without power conversion from DC to AC at the module level.

On December 1, 2011 eIQ announced that its products have logged one million operational hours of field use.

Leading microinverter companies

Enphase

Enphase Energy pioneered the microinverter, rolling out its first microinverter line in June 10, 2008. As competitors have been slow to follow, data about the microinverter market currently means data on Enphase's market presence.

Enphase's M190 and M210 microinverters have been the core of its business, and in October 2009 the company unveiled a M380 "twin-pack" microinverter. All offer standard 15-year warranties. Unlike some new entrants, Enphase uses electrolytic capacitors, and its microinverters offer efficiencies of 95.5%.

On February 1st, 2011 Enphase Energy signed a supply agreement with Siemens Energy (Erlangen, Germany), under which Siemens will sell Enphase microinverters through its network of U.S. electrical equipment distributors. This acknowledgement by a company of the scale of Siemens is one of the largest indicators of the success of the technology to date.

SolarBridge

SolarBridge Technologies (Austin, Texas, U.S.) officially launched its SolarBridge AC module system in October 2010. The company is notable for its approach to microinverter integration, working through partnerships with established module manufacturers who attach microinverters to PV modules at the factory and sell them as a unit.

SolarBridge notes that this approach avoids a number of potential barriers to market acceptance, including lack of installer familiarity with the product, as the microinverter solution will come from a known source. The company also states that incorporating microinverters with modules at the factory lowers overall costs.

SolarBridge places a strong emphasis on product reliability, and offers a 25-year warranty with its microinverters, which it says are designed to last as long as the modules to which they are attached.

The future of microinverters and power harvesting devices

While both microinverters and power optimizers offer distinct advantages in certain situations, they are likely to remain a niche technology in the near future. Several industry analysts have stated that these companies' goals of offering disruptive technologies is still years away.

IMS Research estimates that the total global market share for microinverters and power optimizers was 250 MW in 2010, which represents 1.4% of total PV installations by capacity during the year. Total revenue for the industry is estimated at USD 100 million.

Microinverter market share

Microinverters still make up a very small part of total PV installations. On January 19th, 2011, Enphase shipped its 500,000th microinverter. With a total global installed capacity of roughly 40GW at the beginning of 2011, this means Enphase installations represent less than half of one percent of all PV installations by capacity.

Market share of SMA, Fronius and Enphase for residential systems installed under the California Solar Initiative. Courtesy of Lux Research Inc.

However, in certain markets microinverters are gaining speed rapidly. In 2009, Enphase microinverters served only 5.3% of all residential systems up to 10 kW under the California Solar Initiative. The company more than doubled this market share to 13% in 2010.

With Enphase's exponential growth, microinverters have the potential to present a challenge to residential string inverter markets in coming years, however analysts agree that central inverters will remain standard for large installations.

Power harvesting devices: the new normal?

Power harvesting devices may follow a different path to acceptance, as in many cases, power optimizers are being packed with or even integrated into inverters or even modules, blurring the lines between what is an additional device and what will be the new standard practice.

"I think you are going to see a few more of those arise that a la SolarEdge and a la Kaco Energy and Tigo," states Matt Feinstein of Lux Research. "Because that is a good way to reduce costs and also to shorten the supply chain, and not make installers have to go out and buy two different things."

Industries projected to reach USD 1.5 billion in 2014

Industry analyst IMS Research has quantified its expectations for microinverters and power optimizers, stating that it expects the market for these devices to reach 3-4 GW in 2014, and that total industry size will be around USD 1 billion. However, given the expected growth of the global PV market these technologies will still only be used in a small percentage of PV installations.

IMS Research states that while each technology will grow and achieve increased market share, that neither will completely take the market away from central inverters. The company also states that power optimizers offer market competition to microinverters.

Within these two industries a number of companies are fighting for that market share. Lux Research predicts consolidation in microinverter and power optimizer companies in coming years, particularly as larger companies develop their own microinverter and power optimizer solutions.

Regardless of which directions the industry takes, these technologies have already put additional pressures on inverter manufacturers to provide more sophisticated solutions, which in some cases means incorporating microinverters or power optimization. They also offer an opportunity for module producers to differentiate their products by offering additional value.

In this way, even without currently being truly disruptive technologies, microinverters and power optimizers have pushed the PV industry in its mission to create better, more efficient and reliable solutions for solar power generation.